Monthly Archives: May 2023

May 31

The easy trade bulls AND bears keep screwing up

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 slipped 0.6% as Congress moves toward resolving the debt ceiling crisis.

This negotiated compromise finally lifts the clouds that have been hanging over stocks for weeks. But as I wrote last week, anyone waiting to buy stocks after a debt deal was reached would find themselves a day late and a dollar short. And I further warned readers on Monday:

Of course, now that we are 100 points higher, the risk/reward flipped against us. The easy profits are behind us and we are more vulnerable at the upper end of the recent range. This is the time to be taking profits, not chasing an imaginary breakout.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

Successful traders make money buying risk and selling safety. Last week was the time to buy the debt ceiling worry, and this week was the time to sell the debt ceiling relief. “Buy the rumor, sell the news” is as old as the stock market itself.

As for what comes next, ignore both the bulls and bears. We are not powering higher in a massive short squeeze the same way we are not tumbling back to the 2022 lows on a crumbling economy.

Anyone positioning for a big directional move in either direction is simply not paying attention. This is a choppy, sideways market with a slight upward bias. And now that we are falling into the slower summer months, this will only reinforce the market’s listlessness.

If every dip is going to bounce and every bounce is going to dip, money is made trading against these swings, not betting on their contuation. Until further notice, dips are buyable and rips are sellable.

And just as important, take profits early and often because anyone holding a few days too long will watch their winners turn into losers.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

If you find these posts useful, help me out by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter

May 30

Why smart money was buying the debt-ceiling uncertainty last week

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Our politicians finally did their jobs and reached an agreement to lift the debt ceiling. No one is happy about the proposed deal, but that’s why it’s called compromise.

And since the looming debt ceiling was the biggest worry hanging over the market, stocks finished Tuesday’s session…flat. Funny how that works.

But that doesn’t surprise readers of this blog. This lethargic reaction to good news happens so often it has become a market cliche: ” Buy the rumor, sell the news.”

Anyone waiting to buy the news of a debt deal is waaaay late to the party because all of the profits were collected last week when the outcome was far from certain. This is why I was telling readers to buy last week’s dip on Wednesday:

As for what comes next, expect the choppy, sideways trade to continue. We’re not going anywhere, but that won’t stop impulsive traders from jumping from one side of the boat to the other.

Until further notice, we keep trading against these swings. That means this week’s swoon is a buying opportunity.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

Of course, now that we are 100 points higher, the risk/reward flipped against us. The easy profits are behind us and we are more vulnerable at the upper end of the recent range.

This is the time to be taking profits, not chasing an imaginary breakout. Feel free to leave some money in the market, but make sure we lift our trailing stops to protect last week’s profits. And as always, taking some worthwhile profits proactively is never a mistake. Remember, we only make money when we sell our winners.

As for what comes next, this week’s break above 4,200 could trigger a short squeeze up to 4,300. That’s not the most likely outcome, but it is certainly a possibility. If prices rally on Wednesday, buy back what we sold on Tuesday and ride that wave higher. But most likely, not much will happen, and that means we waiting to buy the next dip under 4,200.

It makes no difference to me what happens next, only that my trading plan will be ready when the next profit opportunity comes along.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

If you find these posts useful, help me out by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter

May 26

This market is NOT fixed and bears have no one to blame but themselves

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 popped 1.3% Friday, extending Thursday’s gains and the index closed at the highest levels in nine months. Not bad for a market that was in freefall three days ago.

This late-week rebound shouldn’t surprise readers of this blog. I warned bears on Wednesday to protect those mid-week profits:

Until further notice, we keep trading against these swings. That means this week’s swoon is a buying opportunity…[J]ust like how bulls got stung this week, bears pressing their shorts are making the same mistake. This is the kind of market where if we’re not taking profits, we will be taking losses a few days later.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

And wouldn’t you know it, here we are two sessions later and greedy bears let those nice profits turn into painful losses.

This game isn’t hard to figure out once we recognize the patterns. This is not a directional market, it is a choppy, sideways one. Anyone betting on the breakout or breakdown is getting chewed up and spit out a few sessions later when the market reverses.

People who claim this market is fixed are just telling the rest of us they have no idea what they are doing. It is obvious this is a choppy, sideways market and it is no one’s fault but our own if we are letting a bearish or bullish bias wreck our trades.

That said, there is an upward drift to this sideways, choppy trade. The gains are bigger than losses and that drift will continue next week. I will still be taking profits following big moves, but I’m riding this up wave a little longer.

Buy low, sell high, and repeat as many times as the market lets us.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

If you find these posts useful, help me out by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter

May 24

Why Bears are about to make the same mistake Bulls just made

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 skidded for a second session on Wednesday, giving up -0.7% and erasing all of last week’s gains.

As I warned readers late last week, and again on Tuesday:

If you are not taking profits when you have them, you won’t have profits left to take.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

Last week’s buyers that failed to heed this warning watched all of those profits slip between their fingers. Greed doesn’t pay in this market, and it has been zinging both bulls and bears over the last several weeks and months.

The debt ceiling bickering continues, and that is enough to cool demand for stocks near 52-week highs. As I’ve written before, the debt thing will get done because the consequences of it not happening are too great. But as is usual, a deal won’t be stuck until the final hour, and we should expect the headlines to get even uglier before then.

This stubborn standoff is SOP for partisan politics. And most traders know this, that’s why stocks are not significantly lower. But at the same time, this background noise is enough to keep investors from enthusiastically pushing stocks even higher.

As for what comes next, expect the choppy, sideways trade to continue. We’re not going anywhere, but that won’t stop impulsive traders from jumping from one side of the boat to the other.

Until further notice, we keep trading against these swings. That means this week’s swoon is a buying opportunity.

Sometimes it takes a few bounce attempts before the real one comes along, but that bounce is coming. And just like how bulls got stung this week, bears pressing their shorts this week are making the same mistake.

This is the kind of market where if we’re not taking profits, we will be taking losses a few days later.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

If you find these posts useful, help me out by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter

May 23

Why Bulls AND Bears keep getting this market wrong

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 tumbled -1.1% Tuesday, giving back a significant portion of last week’s big gains.

Easy come, easy go. Luckily, this reversal doesn’t surprise readers. As I wrote in last Friday’s free post when the index was pushing to multi-month highs:

This is a choppy market and if we’re not taking profits when we have them, we will be taking losses a few days later. The market is still acting well and we don’t need to run for the hills, but it definitely makes sense to peel off some profits, putting a nice chunk of change in our pocket and lowering the risk if this selling continues next week.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

And wouldn’t you know it, here we are a few days later, and anyone still holding watched a nice pile of profits slip through their fingers.

We buy when we don’t want to buy, which is exactly what I was telling readers to do last Monday before stocks popped:

Until something changes, I’m sticking with what is working and that is waiting for the index to rally up to, and through 4,200 resistance. The market is taking its time, but as I’ve been saying for a while, something that refuses to go down will eventually go up.

And we sell when we don’t want to sell, like last Friday when stocks were challenging multi-month highs.

Trading isn’t hard when we recognize what’s coming. Last week, this was a market that refused to go down, making 4,200 the next obvious target. But once we got there, it was time to switch directions because this is a choppy, indecisive market, not a directional one.

Bears betting on a breakdown last week were just as wrong as bulls this week betting on a breakout. Buy when the crowd claims stocks are on the verge of collapse and sell when the crowd is fat, dump, and happy.

This market will make a big directional move at some point, but this is not that point. We are slipping into the slower summer months, and institutional money managers are sneaking off to their summer cottages. Until they return in September, expect this choppiness and indecisiveness to continue. That means buying the dips and selling the rips for the foreseeable future.

If you are not taking profits when you have them, you won’t have profits left to take.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

If you find these posts useful, help me out by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter

May 19

Why even bulls should be taking profits near 4,200

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 started Friday’s session with nice gains, adding to Wednesday’s and Thursday’s big rallies. Unfortunately, the buying enthusiasm peaked in those early hours and the index eventually closed in the red, down a fairly modest 0.1%.

Debt ceiling negotiations broke off without plans to resume. Debt ceiling squabbles haven’t been a problem for this market thus far, but we haven’t been this high either. Higher prices mean higher expectations, which makes it easier for hopeful investors to end up disappointed.

Lucky for readers, Friday’s cooling exactly what I described in Thursday evening’s free post:

As for what comes next, momentum is still higher, but 400 points later is the wrong time to be jumping aboard this rebound. The big and easy profits came to those of us that had the courage to buy months ago.

I can see this going a little higher, but we are falling into the slower summer season and I don’t see a lot of institutional buying happing until after summer is over. That means this is the time to be taking profits, not adding new money.

We don’t need to sell everything here, but it makes sense to lift our stops and start peeling off some partial profits. It is amazing how good it feels to put some well-deserved profits in our pockets.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

Is Friday’s selling the start of the next big pullback? No, of course not. But recent gains flip the risk-reward against us. Higher prices increase the odds of a near-term step back, and that’s exactly what we got Friday.

There is no reason to read anything more serious into Friday’s price action. As expected, we finally challenged and even broke through 4,200 resistance, but now the sideways grind resumes. Friday’s cooling price action is nothing more than that.

We buy when it is hard to buy (low), and we sell when it is hard to sell (high). Follow those simple rules and we will always outperform the average trader buying when it is easy (high) and selling when it is easy (low).

Is this the start of a bigger selloff? No, probably not. But it could be, and I’m not willing to bet this week’s pile of profits on a trade with such a poor risk/reward. (The potential profits left in this move are far smaller than the risks hanging over us.)

This is a choppy market and if we’re not taking profits when we have them, we will be taking losses a few days later. The market is still acting well and we don’t need to run for the hills, but it definitely makes sense to peel off some profits, putting a nice chunk of change in our pocket and lowering the risk if this selling continues next week.

As for Monday’s session, start buying back in if the break above 4,200 resistance turns into a powerful short-squeeze. In the other direction, if the air continues coming out of this week’s rebound, the most confident and aggressive can start shorting the cooling off.

Sign up for my FREE email alerts so you don’t miss the market’s next big move

If you find these posts useful, help me out by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter

1 2 3 4